jurisdiction

1. Are members of the armed forces permitted to hold shareholdings in private companies, including startups, provided that they do not participate in management?

There is no indication of a general Dutch rule that would prohibit members of the Dutch armed forces from holding a passive minority shareholding in a private company, including a startup, solely because they are military personnel.

A passive shareholding without any management, board, advisory, operational or supplier role is generally distinguishable from the performance of outside activities.

However, a different assessment may arise where the shareholding is accompanied by active involvement in the company or where the company operates in the defence sector, supplies or seeks to supply the Ministry of Defence, participates in defence procurement, develops sensitive technologies or otherwise overlaps with the service member's official duties.

2. Is notification or approval required before acquiring a shareholding or establishing a company?

The Dutch framework is not best understood as a general prior-approval regime for acquiring shares.

For military personnel in active service, outside activities must be notified where they may affect the interests of the service in connection with the performance of the individual's duties.

The relevant framework is primarily based on the rules governing military personnel and integrity, including Chapter 11a of the General Military Civil Servants Regulations (Algemeen militair ambtenarenreglement – "AMAR"). The AMAR framework is based on notification and case-by-case assessment rather than a blanket prohibition.

Following such notification, the competent authority may assess whether the activity is, or may become:

  • detrimental to the performance of the individual's duties;
  • incompatible with the dignity or reputation of the office; or
  • otherwise inconsistent with the proper functioning of the public service.

Depending on the outcome of that assessment, the activity may be permitted, permitted subject to conditions or prohibited.

In practice, where the company operates in the defence sector or may have dealings with the Ministry of Defence, it would be prudent for the service member to disclose the interest and seek guidance in advance, even where the shareholding is intended to remain passive.

3. Are there any notable limitations, thresholds or conflict-of-interest rules?

The relevant limitations arise from the AMAR integrity framework and relate primarily to conflicts of interest, impartiality, security considerations and the proper performance of official duties.

The assessment is carried out on a case-by-case basis and seeks to prevent actual or perceived conflicts of interest, conflicts between private interests and defence interests, damage to the reputation of the office and adverse impacts on the service member's availability to perform their duties.

Even where a passive shareholding does not qualify as an outside activity, financial interests may still be relevant from an integrity perspective. Dutch legislative materials on public-sector integrity recognise that certain financial interests or financial transactions may create actual or perceived conflicts of interest or give rise to other integrity concerns.

These considerations may be particularly relevant where the company operates in the defence sector or is involved in defence procurement, sensitive technologies, access to classified information or security-critical activities. The Defence Code of Conduct also emphasises personal responsibility and professional conduct, including the requirement that defence personnel should not harm the interests of the Ministry of Defence.

Conclusion

Dutch law does not impose a blanket prohibition on passive share ownership by military personnel. The key considerations are conflicts of interest, integrity, impartiality, security requirements and the relationship between the investment and the individual's official duties, all of which are assessed on a case-by-case basis.